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November 22, 2000

Some Thanksgiving For The Bulls!
Weiss Commentary

Here's something to digest before you consider feasting on any more tech stocks this year ...

In the two weeks from Election Day to yesterday, more than $1.62 trillion of wealth has vanished from the Nasdaq Composite Index, the Dow, and the S&P; 500. Since all three indexes peaked earlier this year, investors have lost $3.96 trillion.

This year alone, investors have sustained stock market losses equal to 40% of America's total economic output. This is the most severe loss since the crash of '29. Put into perspective, today's losses tower over the capital carnage of the 1987 stock market crash.

But if you think that the worst is over, think again. The Nasdaq, for instance, hasn't even approached the price-to-earnings levels that it was at before the bubble began to inflate. The Nasdaq's current price level of around 2,900 for the Nasdaq 100 Index is equal to where it was just one year ago. And today's p/e ratio is still higher today with a p/e of 124 -- last November the p/e was in the 80s.

In other words, on a p/e basis -- which is how the Nasdaq 100 Index traded up until mid-decade -- the index has much further to fall before it offsets even the latest, super-inflated phase of the tech sector bubble that began last autumn.

To return to the multiple of three years ago, we'd need another 1,600-point slide in the index, to the low 1,200s. To get back to the valuation level of the mid-90s would require a 2,000-point drop.

Final analysis: On this Thanksgiving holiday, the Nasdaq is truly a turkey!

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